Nintendo slashes Wii U sales projections, predicts loss

Nintendo now hopes to ship just one-third of its original console target.

Nintendo has been forced to modify its financial forecasts in the wake of disastrous Wii U sales.

The company initially predicted that it would shift 9 million Wii U consoles, but the revised sales predictions for the financial year ending in March 2014 now stand at 2.8 million—less than a third of Nintendo's previous figure. The modifications also see the 3DS sales figures tweaked downward, but on nowhere near the scale of the Wii U.

The company's operating profit of 100 billion yen ($958 million) that was predicted at the start of the financial year has become an operating loss of 35 billion yen (around $335 million).

"Sales [of the Wii U] in the US and European markets in which we entered the year-end sales season with a hardware markdown were significantly lower than our original forecasts, with both hardware and software sales experiencing a huge gap from their targets. In addition, we did not assume at the beginning of the fiscal year that we would perform a markdown for the Wii U hardware in the US and European markets. This was also one of the reasons for lower sales and profit estimates."

He added, "The drop in software sales had the largest negative effect on our profit forecasts."

Also affecting the profit forecasts are Nintendo's advertising and R&D expenses. The advertising expenses are chalked up to currency conversions using a weaker yen rate, but the R&D costs are "based on reflecting our ongoing enhancement of the development structure, and new research and development activities." Probably wise given the performance of the Wii U.

Iwata confirmed that further information would be made available on January 30 after the company announces its third quarter financial results.